Chapter 9, Problem 4QS

Distinguishing between allowance method and direct write-off method P1 P2

Indicate whether each statement best describes the allowance (A) method or the direct write-off (DW) method.

_1. Does not predict bad debts expense.
___2. Accounts receivable on the balance sheet is reported at net realizable value.
___3. The write-off of a specific account does not affect net income.
_4. When an account is written off. the debit is to Bad Debts Expense.
___5. Usually does not best match sales and expenses because bad debts expense is not recorded until an account becomes uncollectible, which
usually occurs in a period after the credit sale.

_G. Estimates bad debts expense related to the sales recorded in that period.